Finding ways to be more profitable
Just this last week I did my usual reviews of my stats/trades and found something that ive seen before.
I ended the week +9$ and +11.3R
If I follow my usual risk of 50$ a trade, and ended with +11R that would mean I should at least be up 550$ right?
Well that would be the case if I was consistent with my risk and my average winning position. The 4 main outliers were on my best R trades of the week at 7.5 / 6.1 / 5.9 / 4.0 for a total of +23.5R and my losers on the week totaled at -23.6 so almost the the penny should have eliminated all the losses.
Those 4 wins totaled +440$ and those 27 losses totaled -888$
The total at risk $ for those 4 trades is 76$ which is WELL below what it should be. Avg 19$
The total at risk $ for those 27 losers is 1034$ for an avg of 38$. Double the size of those 4.
Risking 1034$ and only taking -888$ isnt great either but that is besides the point.
So those 4 trades that could have totaled +1175$ if using 50$ per trade risk would have wiped out all my losses and then some, instead we have only cut them in half. This is a clear problem so what happened?
Well those 4 trades, 2 were SPY divergence scalps which are somewhat new to me and im building that process more as I go, one was a TSLA scalp that exploded and the other was an intraday hold on AMAT that I didnt add to.
So aside from the fact I should have been bigger from the start on these trades, its about adding. Adding is the key word here and something that I havent thought about enough to incorporate it into my process.
Saw this tweet the other day, then did my review, then saw his added tweet and really started making me thinking more about this. These numbers and stats are my why instead of how. The how is the easy part, we are just looking to add to our winners. The why is in the numbers. It needs to change or else I will keep having +9$ weeks.
So now I know why, how to do it?
I know that one of my strengths lies in my ability to read the tape. I can tell when some names are acting strong, some stronger than others, and some weak and around significant levels.
I know I am also a breakout trader
There are A LOT of cases in my trades where I get in at the break, we take off and never return. Simple breakout right so how can I make the most out of it. I used to and still do wait for pullbacks and debate if I want the add there or not but I think the bigger thing I can do here is play with my scalps more and adding to them faster.
I ended the week +9$ and +11.3R
If I follow my usual risk of 50$ a trade, and ended with +11R that would mean I should at least be up 550$ right?
Well that would be the case if I was consistent with my risk and my average winning position. The 4 main outliers were on my best R trades of the week at 7.5 / 6.1 / 5.9 / 4.0 for a total of +23.5R and my losers on the week totaled at -23.6 so almost the the penny should have eliminated all the losses.
Those 4 wins totaled +440$ and those 27 losses totaled -888$
The total at risk $ for those 4 trades is 76$ which is WELL below what it should be. Avg 19$
The total at risk $ for those 27 losers is 1034$ for an avg of 38$. Double the size of those 4.
Risking 1034$ and only taking -888$ isnt great either but that is besides the point.
So those 4 trades that could have totaled +1175$ if using 50$ per trade risk would have wiped out all my losses and then some, instead we have only cut them in half. This is a clear problem so what happened?
Well those 4 trades, 2 were SPY divergence scalps which are somewhat new to me and im building that process more as I go, one was a TSLA scalp that exploded and the other was an intraday hold on AMAT that I didnt add to.
So aside from the fact I should have been bigger from the start on these trades, its about adding. Adding is the key word here and something that I havent thought about enough to incorporate it into my process.
Saw this tweet the other day, then did my review, then saw his added tweet and really started making me thinking more about this. These numbers and stats are my why instead of how. The how is the easy part, we are just looking to add to our winners. The why is in the numbers. It needs to change or else I will keep having +9$ weeks.
So now I know why, how to do it?
I know that one of my strengths lies in my ability to read the tape. I can tell when some names are acting strong, some stronger than others, and some weak and around significant levels.
I know I am also a breakout trader
There are A LOT of cases in my trades where I get in at the break, we take off and never return. Simple breakout right so how can I make the most out of it. I used to and still do wait for pullbacks and debate if I want the add there or not but I think the bigger thing I can do here is play with my scalps more and adding to them faster.
Aside from having hindsight bias and seeing that they blew up, I also keep video logs and tags for each trade. These two had solid breaks that never returned and had clear tape cues after the break.
What I want to do now is look to add IMMEDIATELY after the break if there is good tape action after the break. Because I know that my best trades never go against me, if I am seeing what I want to see after my entry, I should already be looking to make the most of it.
There will be times I am wrong and I lose more than I started and that is fine thats why we manage our risk. My risk will still start the same as its always been, but will look to add on right away. So if I go in with 100 shares, ill look to add 50 as price will have already left and ill be increasing my avg cost while not moving my stop loss.
But when I am right. I am playing my strengths and capitalizing on them and that is what I need to do to make sure im getting the most out of my best.
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